What is Fund Switch in ULIP? | ULIP Fund Switching Techniques
Close

Buy a Life Insurance Plan in a few clicks

Close

Now you can buy life insurance plan online.

Kotak e-Term Plan

Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

Kotak Guaranteed Savings Plan

Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

Kotak E-Invest

Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs. Know more

Kotak Health Shield

Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability. Know more

Kotak Lifetime Income Plan

Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime! Know more

What is Fund Switch in ULIP? And ULIP Fund Switching Techniques

 What is Fund Switch in ULIP? And ULIP Fund Switching Techniques
  • 15th Jul 2022 |
  • 2,633

Keywords: ulip fund switching techniques

ULIP or Unit Link Insurance Plan is the type of plan that offers dual benefits of insurance as well as investment to the policyholder. It is an ideal strategy for all those who prefer meeting their life goals along with mitigating any investment risk. With the help of the ULIP fund switching technique, you can easily manage your investment returns for higher gains. In addition, with increased market volatility, you can easily move your investment from one fund to another that suits your needs. Are you wondering how fund switches in ULIP occur or what are the benefits? Then you are on the right page. This article provides in-depth detail regarding fund switching in ULIPs.

How does ULIP Fund Switching Technique Work?

You can find numerous fund options available on ULIP ranging from equity, debts etc., to invest in depending upon various factors like risk appetite, life goals, age and many more; you can choose the best funding option for yourself. In the future, if you are unsatisfied with the returns or want to shift to some other funds because of market uncertainty, you can easily switch under these circumstances. You have the option to either partially or completely transfer the investment fund. Initially, the policyholder gets a limited number of free fund switches in ULIP, but with the exhaustion, you will have to pay a fund switch charge to transfer the units.

Benefits of ULIP Fund Switch

ULIP fund switching technique is one of the ways to gain profits in the long run, as it allows you to switch between funds. Below mentioned are some of the benefits associated with switching the funds in ULIPs:

Risk Appetite Based Investment

When it comes to investing money in some funds, most investors have a certain risk appetite. However, your preference for risk and return might change with a time interval. This is where the ULIP fund switch helps you! In case your risk appetite is expected to change, you can easily apply for the ULIP fund switching option.

Investing According to Life Goals

Our life goals and financial responsibilities keep on changing with different circumstances. The fund switching will help you to manage the investments on the basis of your long-term goals.

No tax applicable

Apart from the charges that your insurer applies to provide you with the fund switching facility, there is no tax applicable to it. However, it will be applicable to the maturity benefits if the annual premium is not more than INR 2.5 lakhs.

To get the best from ULIP fund switching, it is advisable to track the performance of your investment.

Types of ULIP Fund Switching Techniques

Generally, there are two fund switching techniques that are mentioned below:

Life Stage Based ULIP Fund Switching Technique

This technique works on the principle that the risk appetite of an investor purely depends upon which life stage they are in. Therefore, many youngsters tend to have a higher risk appetite as they can afford to take risks. However, with time or as you grow older, it is highly advisable to switch from equity-oriented funds to debt funds which are low-risk in nature. These fund-switching techniques suit your life stage and earn lucrative returns.

Fund Switching to Maximise Profit

Here, the switching of the funds depends on the market performance. The policyholder needs to be very careful while using this technique as market fluctuations are quite unpredictable. To maximise the gains from the policy, you must have a good understanding of the fund pattern and the share market.

When is the Best Time to Switch?

The market usually goes through ups and downs, which creates uncertainty in the minds of investors. But, now, with the ULIP fund switching technique, an investor can easily cut their losses if they are not satisfied with a fund’s performance or want to switch to safer funds if they foresee a drop in the market. You can make switches according to your life stage or personal financial goals. Once you start picturing your investment goals, you can switch to low-risk debt funds and secure your capital.

Some Ground Rules To Switch Funds Effectively and Maximise ULIP Returns

1 .It is advisable for you to initiate your ULIP plan by investing in debt funds since they are less risky and assure steady returns on investments.

2. Keep your debt funds intact for as long as possible.

3. Keep track of your funds and investments.

4. Switch from debt funds to equity-oriented funds after the stock market has been steady for some period.

5. Remain patient in case of unpredictable market fluctuations

6. Avoid switching funds during every high and low of the market.

7. To gain high returns, you must stay invested for the long term

Conclusion

Before investing in the policy, it is extremely important to have an in-depth understanding of the features of Unit-Linked Insurance Plans.

You can always choose the ULIP fund switching technique in case of uncertainty, but make sure that for better and long-term gains, you do not practise it continually every time the market fluctuates.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

What is a Savings Plan and What are is Benefits?

Important Questions You Must Ask Yourself When Buying a ULIP Plan

Safe Investment Options with High Returns for FY 2018-19

Benefits of ULIP as a Child Insurance Plan

How is Compoud Annual Growth Rate (CAGR) Calculated in ULIP?

Investment Options for NRIs in India

Can ULIP Help in Achieving Short-Term Financial Goals?

Importance of Portfolio Management

What are the Best Investment Options for Young Adults?

Asset Allocations in ULIP - Know the Top Benefits

Top 5 Investment Options in 2022 for Healthy Returns

Who Should Invest in Savings Plan?

What are Some of the Safest Investment Options in India?

How To Diversify Portfolio In 2022?

Learn About Safe Investments with High Returns in India

Short Term and Long Term ULIP Plans for Wealth Creation

What is the Importance of Saving Money?

Learn About Safe Investments with High Returns in India

Savings Plan for Grandchildren

Different Types of Endowment Plans

How To Track ULIP Performance?

Investments Options to Buy a house in India

How to Cancel ULIP Policy?

Creating a second source of income with life insurance

Long Term Savings Plan - Best Savings Investment Plans in India

Building wealth through regular investing

ULIP Plan as a Gift

Do You Know the Difference Between Savings and Investment?

How Do One-Time Investment Plans Work?

How to Increase Net Worth Along with Family Protection

How Much Wealth Can You Create from ULIP in 10 years?

What's Better for Your Child's Education? Child Plans or Mutual Funds?

ULIP vs FD - Which is Better and Why?

Debt ULIPs vs. Debt Mutual Funds: What's the Difference?

Best Investment Options in India in 2022

How to Fulfil Your Financial Goals in the Next 10 Years?

3 Tips to Buy Guaranteed Savings Plan

Successful Financial Planning for Urban Women

Top 10 Investment Strategies to Create Wealth

How to Plan your Investment to Achieve Periodic Financial Goals?

Planning Financial Goals and Objectives of Financial Planning

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

Difference Between Guaranteed Savings Plan and ULIP

What are the Best Investment Options for Students in India?

Top 6 Investment Plans Available in India

What are Deferred Savings Plans?

4 Important Tips to Maximize Gains with ULIP Investments

How to Make Your Financial Portfolio?

What is better - Guaranteed Savings Plan or Fixed Deposit?

Why Should You Invest in Term Insurance And ULIP?

Best One-Time Investment Plans in India

What are the Best Investment Options For Females?

Basics of Guaranteed Savings Plan

Why ULIP is Better Investment for Long-Term Wealth Creation?

Which is a Better Investment - Mutual Funds Or ULIP?

Why Should You Consider Guaranteed Savings Plan for Long-Term Investment?

What are Tax-Deferred Savings Plans?

Things to Know Before Buying an Endowment Plan

How to Manage Inheritance Money?

ULIP as an Investment for Your Child

Receiving regular payouts at various stages of life

How to Manage Your Portfolio Like a Professional?

Planning for Your Child's Higher Education? Explore These Investment Options

Best Investment Options to Cover Your Child's Education

Which are the Best Investment Plans for Indian Senior Citizens In 2022?

How to Start Saving Money in 10 Simple Ways?

What are the Best Investment Options for Beginners or Amateur Investors in India?

How Can a Legal Nominee Claim ULIP Benefits are the Policyholder’s Death?

Is This The Right Time To Invest In ULIP? Why or Why Not?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

Top 5 Principles That Need to be Followed for Wealth Creation

Why Should Parents Invest in Endowment Plan?

What is ULIP Renewal?

Beginner's Guide to Wealth Creation: Meaning, Strategies, & Importance

Difference Between Passive and Active Investing

Why Do You Need A ULIP Plan - All You Need To Know

Why is Portfolio Diversification Important? How to Diversify Your Portfolio?

Customising investments to manage your wealth

ULIP Benefits You Can Avail from Early Investing

How to Plan Your Child's Education - A Step by Step Guide

Which is Better – FD, Mutual Fund, SIP, or ULIP?

4 Benefits of ULIP Fund-Switching Feature

Early Investing and the Power of Compounding

How Does an Endowment Plan Work?

Complete Savings Plan for Low Income Earners

Endowment Plan vs Fixed Deposit?

What are the Best Short-Term Investment Plans with High Returns?

How to Plan Savings from Salary?

Are Gains from ULIP Sale Taxable?

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

Are Money Back Policies Helpful? A Complete Guide